Authorization of Foreign Locations – The July 1, 2018 Rule That Was Not Delayed

A little discussed component of the state authorization regulations is Chapter 34, Section 600.9(d) on authorizations for locations or branch campuses in other countries. In the announcement released on July 3, the Department decided NOT to delay the implementation of that part of the regulation. Therefore, it became effective July 1 and institutions are expected to comply as of that date.

Since we, nor anyone else really, has discussed this regulation very much, we thought we would give you a brief summary of who is affected and what is required. Cooley, LLP also provided a short analysis. You may also want to review the public comments and the Department’s responses when the regulation was originally released in 2016 for additional details.

Which Institutions Must Comply?

Important points to understand about these requirements…as best we understand:

• They are aimed at actual, physical “locations” or “branch campuses,” which are defined as:
  • A ”location” is a place where at least 50% of an educational program is offered (as defined in the Federal Student Aid Handbook 2017-18, p. 2-128).
  • A “branch campus” (as defined in 600.2) is special instance of a location that is “independent” of the main campus having its own faculty, administration, budgetary authority, and hiring authority.
• This DOES NOT apply where:
  • The “additional location or branch campus is physically located on a U.S. military base, facility, or area that the foreign country has granted the U.S. military to use and the institution can demonstrate that it is exempt from obtaining such authorization from the foreign country.”
  • Only distance education courses and programs are offered by an institution in the U.S. to individuals in other countries.
  • The institution is engaged in a partnership with an institution located in another country to offer students international educational experiences. From the Department’s responses to comments when the regulation was released: “They do not apply to study abroad arrangements or other agreements that domestic institutions have with foreign institutions whereby a student attends less than half of a program at separate foreign institutions…”
  • The institution is offering courses, but not federal financial aid to students. Remember that these rules are all about compliance for federal Title IV purposes.

The Requirements

Institutions offering federal Title IV financial aid are expected to do each of the following for foreign locations or branch campuses:

• “For any additional location at which 50 percent or more of an educational program (as defined in §600.2) is offered, or will be offered, or at a branch campus” (underlining added) the institution must do the following:
  • Be “legally authorized by an appropriate government authority” to operate in that country unless otherwise exempted.
  • Be able to produce that authorization upon request by the Secretary.
  • Have the location or branch campus approved by the institution’s accrediting agency.
  • Show that the location or branch campus meets any additional requirements of the country.
  • Report to the State in which its main campus is located at least annually “the establishment or operation of each foreign additional location or branch campus.”
  • Comply with any limitations its home state places on operating that location or branch campus in another country.
• For locations or branch campuses where less than 50 percent of an educational program is offered, the institution must “must meet the requirements for legal authorization in that foreign country as the foreign country may establish.”
• In addition, “the institution must disclose to enrolled and prospective students at foreign additional locations and foreign branch campuses the information regarding the student complaint process described in 34 CFR 668.43(b), of the State in which the main campus of the institution is located.”
• Finally, “If the State in which the main campus of the institution is located limits the authorization of the institution to exclude the foreign additional location or branch campus, the foreign additional location or branch campus is not considered to be legally authorized by the State.”

How Many Institutions Might Be Affected?

An article on the NAFSA (the international education association) website cites research on International Branch Campuses (IBCs) saying: “The United States is the largest provider of IBCs globally, currently sponsoring 78 campuses, or about one-third of all IBCs in existence today.” A list of branch campuses identified in that research also provides links to each one. The research might not cover “locations” or sites that emerged since they conducted their analysis.

The State Authorization Reciprocity Agreement does not address activity outside the United States as the agreement is only among U.S. states.

Bottom line: Most institutions are not involved. But, it will be interesting when a name independent university realizes that it is supposed to follow the limitations that its state oversight board places on its creating locations and branch campuses in other countries. For example, did Duke University get approval from the state of North Carolina for its branch campus in China? Maybe they don’t offer aid to those students?

If you have a significant physical presence in another country, it would be good to check if you trigger this rule.

Good luck.

Russell Poulin
Director, Policy & Analysis
WCET – WICHE Cooperative for Educational Technologies
rpoulin@wiche.edu | @russpoulin

 

 

Cheryl Dowd
Director, State Authorization Network
WCET – WICHE Cooperative for Educational Technologies
cdowd@wiche.edu

 

 

Text from the regulation:

(d) An additional location or branch campus of an institution that meets the requirements under paragraph (a)(1) of this section and that is located in a foreign country, i.e., not in a State, must comply with §§600.8, 600.10, 600.20, and 600.32, and the following requirements: (1) For any additional location at which 50 percent or more of an educational program (as defined in §600.2) is offered, or will be offered, or at a branch campus– (i) The additional location or branch campus must be legally authorized by an appropriate government authority to operate in the country where the additional location or branch campus is physically located, unless the additional location or branch campus is physically located on a U.S. military base, facility, or area that the foreign country has granted the U.S. military to use and the institution can demonstrate that it is exempt from obtaining such authorization from the foreign country; (ii) The institution must provide to the Secretary, upon request, documentation of such legal authorization to operate in the foreign country, demonstrating that the foreign governmental authority is aware that the additional location or branch campus provides postsecondary education and that the government authority does not object to those activities; (iii) The additional location or branch campus must be approved by the institution’s recognized accrediting agency in accordance with §602.24(a) and §602.22(a)(2)(viii), as applicable; (iv) The additional location or branch campus must meet any additional requirements for legal authorization in that foreign country as the foreign country may establish; (v) The institution must report to the State in which the main campus of the institution is located at least annually, or more frequently if required by the State, the establishment or operation of each foreign additional location or branch campus; and (vi) The institution must comply with any limitations the State places on the establishment or operation of the foreign additional location or branch campus. (2) An additional location at which less than 50 percent of an educational program (as defined in §600.2) is offered or will be offered must meet the requirements for legal authorization in that foreign country as the foreign country may establish. (3) In accordance with the requirements of 34 CFR 668.41, the institution must disclose to enrolled and prospective students at foreign additional locations and foreign branch campuses the information regarding the student complaint process described in 34 CFR 668.43(b), of the State in which the main campus of the institution is located. (4) If the State in which the main campus of the institution is located limits the authorization of the institution to exclude the foreign additional location or branch campus, the foreign additional location or branch campus is not considered to be legally authorized by the State.

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